Shares of Alphabet (GOOGL) are up 4% after the technology giant reported third-quarter financial results that topped Wall Street estimates across the board.
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The parent company of the Google search engine announced earnings per share (EPS) of $2.12, which was well ahead of the consensus estimate of $1.84. Revenue in the quarter came in at $88.27 billion, which topped Wall Street’s consensus forecast of $86.30 billion. Sales were up 15% from a year earlier.
Breaking Down Alphabet’s Results
In terms of Alphabet’s divisions, YouTube advertising revenue came in at $8.92 billion compared to $8.89 billion that was anticipated among analysts. Google Cloud revenue was a particular bright spot for the company, bringing in revenue of $11.35 billion vs. $10.88 billion that was forecast on Wall Street.
Search revenue in Q3 totaled $49.39 billion, which was ahead of the consensus call among analysts for $49.02 billion. Additionally, capital spending during the quarter totaled $13.06 billion, which was above estimates for $12.66 billion. Analysts and investors have been focused on the company’s capital spending as Alphabet continues to invest heavily in artificial intelligence (AI) technologies.
Difficult Times for Alphabet
The latest print from Alphabet comes at a difficult time for the company and its shareholders. Alphabet continues to deal with several antitrust lawsuits that accuse it of operating as a monopoly, particularly in its online search and advertising business.
At the same time, the company has made several internal changes in an effort to position itself to better compete in the red hot AI space. Alphabet recently replaced Prabhakar Raghavan, the company’s search and ads boss since 2018, with Nick Fox, a longtime executive known for his role in Google’s Assistant unit.
Management has said repeatedly that they want to move more quickly in the global AI race, where they face rising competition from entrants such as Microsoft-backed (MSFT) OpenAI. In August, Alphabet unveiled its new Android software update and its latest Pixel smartphones that utilize the company’s Gemini AI assistant.
GOOGL stock has gained 22% so far this year.
Is GOOGL Stock a Buy?
Alphabet stock has a consensus Strong Buy rating among 28 Wall Street analysts. That rating is based on 22 Buy and six Hold recommendations made in the last three months. There are no Sell ratings on the stock. The average GOOGL price target of $201.54 implies 18.78% upside from current levels.
